MacDonald Dettwiler and Associates Ltd said on Friday it had agreed to buy U.S.-based DigitalGlobe Inc for about C$3.10 billion ($2.40 billion) to strengthen its position in the lucrative satellite imagery market. Under the deal, MacDonald Dettwiler and Associates (MDA) will offer $17.50 in cash and 0.3132 of its share for each DigitalGlobe share held. The deal includes assumption of DigitalGlobe’s debt of C$1.60 billion and is expected to add to MDA’s operating earnings per share in 2018.
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The total cash-and-stock offer represents a premium of 18 percent to DigitalGlobe’s closing stock price on Feb. 16, before reports of a potential deal emerged. MDA’s technology, used in satellites and ground stations, will help enhance DigitalGlobe’s services, and enable the combined company to extend its lead in providing Earth imagery to the U.S markets.
DigitalGlobe in 2014 used crowdsourcing to search for a missing Malaysia Airlines jetliner, inviting internet users to comb through satellite images of over 1,200 square miles (3,200 square km) of seawater for signs of wreckage. DigitalGlobe’s services are used by companies such Facebook Inc, Uber Technologies Inc and U.S. defense contractor Harris Corp.
MDA builds and manages several satellite systems for Canada’s military and direct-to-home television, satellite radio, broadband internet and mobile communication. DigitalGlobe also reported better-than-expected fourth quarter revenue on Friday and forecast revenue for 2017 above analysts’ average estimates.
MDA Chief Executive Howard Lance will lead the combined company. DigitalGlobe’s headquarters will remain in Westminster, Colorado and the combined company will have about 4,600 employees in the United States and continue to employ more than 1,800 employees in Canada. MDA will apply to list its shares on the New York Stock Exchange in addition to its current listing on the Toronto Stock Exchange.
The deal is expected to close in the second half of 2017. BofA Merrill Lynch is the financial adviser to MDA, while PJT Partners and Barclays are serving as advisers to DigitalGlobe.